Samanilla v. Cajucom
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns a real estate mortgage executed by respondents Cenen A. Cajucom and Jose A. Cajucom in favor of petitioner Paz Samanilla on December 20, 1955, to secure a loan of P10,000.00. The mortgage was over the respondents' rights and participation in a parcel of land covered by Original Certificate of Title No. O-966. The petitioner alleged that the respondents borrowed the title in February 1956 under the pretense of segregating a portion of the land, and subsequently refused to return it for the registration of the mortgage. 2. Procedural History: The petitioner filed a petition in the Court of First Instance of Nueva Ecija, Land Registration Case No. 210, G.L.R.O. Rec. No. N-6010, seeking an order for the respondents to surrender the title for mortgage annotation. The respondents opposed the petition, arguing that the mortgage was void for want of consideration and that the issue should be resolved in an ordinary civil action. The lower court, on June 12, 1956, ordered the respondents to surrender the title. The respondents appealed this order to the Court of Appeals, which then forwarded the case to the Supreme Court due to the purely legal question involved. 3. The Petition: The respondents, as appellants, are petitioning the Supreme Court to review the order compelling them to surrender Original Certificate of Title No. O-966 for the annotation of a mortgage. Their primary argument is that the mortgage is void ab initio due to lack of consideration and that this issue must be litigated in a separate ordinary civil action before the title can be surrendered for registration. They contend that surrendering the title would effectively complete the registration process, thereby prejudicing their right to prove the mortgage's invalidity. The Supreme Court, however, is considering the appeal on the question of whether the lower court erred in ordering the surrender of the title for registration despite the alleged invalidity of the mortgage.
Issue(s)
Whether the respondents can be compelled to surrender the title for annotation of the mortgage despite their claim that the mortgage is void ab initio for want of consideration. Whether the validity of the mortgage should be litigated in an ordinary civil action instead of summarily by the land registration court.
Ruling
The Supreme Court affirmed the order of the lower court, compelling the respondents to surrender the title for annotation of the mortgage, without prejudice to their right to file a separate action to question the validity of the mortgage.
Ratio Decidendi
On the issue of compelling surrender of title despite alleged invalidity: The Court held that there is a legal presumption of sufficient cause or consideration supporting a contract, even if not stated therein, pursuant to Article 1354 of the New Civil Code and Rule 123, Section 69(r) of the Rules of Court. This presumption cannot be overcome by a mere assertion of lack of consideration, especially when the contract states consideration was given and is in a public instrument. The Court reiterated the principle that once a mortgage is signed in due form, the mortgagee is entitled to its registration as a matter of right, and the mortgagor cannot unilaterally revoke consent to registration. To overcome the presumption of consideration, appellants must prove lack of consideration by a preponderance of evidence in a proper action. On whether validity should be litigated in an ordinary civil action: The Court found the argument that they cannot be compelled to surrender the title until an ordinary civil action is filed to be fallacious. A mortgage, registered or not, is binding between the parties; registration is only necessary to make it valid against third persons, serving as notice. Registration does not add to the validity between the parties. Appellants retain the right to show the mortgage's invalidity in a separate action. However, denying registration would be dangerous to the mortgagee's rights, as the property could be transferred to an innocent third person. The Court cited Gurbax Singh Pabla & Co., et al. vs. Reyes, et al., stating that questions regarding the effect or invalidity of instruments are expected to be decided after, not before, registration. Therefore, registration must be allowed first, and validity litigated afterwards. The Court distinguished the cited case of Government of the Philippine Islands vs. Payva, noting that in that case, the parties had submitted the question of validity to the court, which was not the situation here as the appellants refused to submit the issue of validity to the land registration court, opting for a separate action.
Main Doctrine
A mortgage, whether registered or not, is binding between the parties. Registration is necessary only to make the mortgage valid against third persons, serving as notice to others but not adding to its validity between the parties. The mortgagor cannot unilaterally revoke consent to registration, and any claim of invalidity must be litigated in a separate action after registration.